In an open letter to the new Chancellor of the Exchequer, the Chartered Institute of Taxation (CIOT) has called for urgent attention to be given to the extreme complexity of the UK's current tax system.

Whilst the CIOT understands that a full-scale review and simplification of the entire tax system would be a long-term project, it also believes that many of the suggestions now being made to the new Chancellor Alistair Darling, would provide some welcome relief to many taxpayers who have to cope with an increasingly complex system.

Key areas of concern include:

• Corporation tax - The Institute believes that there should be a revival of the CT Reform consultative process that was started a few years ago, but later abandoned.
• Small businesses - In particular, the Institute recommends the use of a single registration procedure for new small businesses registering with HMRC.
• VAT - The CIOT suggests that several simple changes are made, including the simplification of VAT on business assets provided for use by an employee at home.
• Income tax and NICs - The CIOT would like to see further moves towards the alignment and integration of income tax and NICs, and an initiative to replace the annual benefits and expenses return by taxing benefits and expenses through the payroll.
• Capital gains tax - This tax could be simplified significantly by bringing in some simple changes to the taper relief rules, including backdating the post-1998 changes to 6 April 1998 so that the definition of business assets applies consistently for all periods of ownership in respect of future disposals, rather than a different definition applying for periods of ownership prior to April 2000. We also believe that it is time for another re-basing of the cost of assets, now for those assets acquired prior to 6 April 1998. The Institute also feels strongly that the trustee residence test should be changed in TCGA 1992 section 69(2D). This is causing an exodus of financial and legal business from the UK at a cost to the Exchequer.
• Inheritance tax and pre-owned assets tax - The Institute would like to see improvements to the disabled trust regime, and are still of the view that equity release schemes, in particular, have extremely inequitable consequences for families.

CIOT President Rob Ellerby and Technical Committee Chairman Stephen Coleclough have requested a meeting with the Chancellor to discuss the issues raised.

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Chartered Institute of Taxation: Open letter 11 July 2007

Article Added Wednesday, 11 July 2007 | 862 Hits

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